Home' Trinidad and Tobago Guardian : November 2nd 2014 Contents NOVEMBER 2 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
For stock investors, there
was no shortage of drama
in October. Stocks started
the month modestly below
a record high, only to cas-
cade to their worst slump
in two years. But after
flirting with a correction,
or a 10 per cent drop, the US market rebound-
ed and closed at all-time highs on the last
day of the month.
All told, US stocks ended October solidly
higher, up 2.3 per cent. The Dow Jones indus-
trial average capped the rally by rising 195.10
points, or 1.1 per cent, to end at 17,390.52 on
Friday. The Standard & Poor s 500 rose 23.40
points, or 1.2 per cent, to 2,018.05 and the
Nasdaq composite added 64.60 points, or 1.4
per cent, to 4,630.74.
Both the Dow and the S&P 500 closed at
It s a remarkable turn given the month s
volatility, which at times approached levels
from the 2008 financial crisis. Then again,
the month has an unfortunate history for
unsettling moves, with the stock market crash-
es of 1929 and 1987 both happening in Octo-
This October, the market s seesaw path was
driven by fears that Europe s economy was
slipping back into a recession, worries about
plunging oil prices and concerns of possible
weakness in the US economy. Oh, and don t
forget Ebola. Those anxieties sent the market,
for the most part, straight down for two weeks.
The nadir came on October 15, when the
S&P 500 came with a hair s breadth of going
into a correction. Investors had suspected
such a drop. The last one occurred in late
2011, and historically corrections happen every
18 months or so.
But just after the market came close to going
into a correction, it bounced right back. Strong
US corporate earnings were the primary driver
of the rebound as well as signs that central
banks in Japan and Europe were going to do
all they could to stop their economies from
dragging everyone else down with them.
"I don t think it s a surprise that we came
close to a correction. We ve been expecting
one for a while. I think the bigger surprise has
been how we rip-roared all the way back up, "
said Bob Doll, chief equity strategist at Nuveen
Asset Management. "When you hit someone
over their head with a hammer, you don t
expect them to get up immediately. "
US companies have been, for the most part,
reporting strong quarterly results the last two
weeks. Corporate profits are up 7.3 per cent
from a year ago, according to FactSet, compared
with the 4.5 per cent investors had expected
at the beginning of the month. And any worries
about the US economy earlier in the month
evaporated as the data rolled in, mostly recently
Thursday s data showing the US economy
grew at a 3.5 per cent pace last quarter.
Friday s gains were driven by the Bank of
Japan, which surprised investors by announc-
ing it would increase its bond and asset pur-
chases by 10 trillion yen to 20 trillion yen
(US$90.7 billion to US$181.3 billion) to about
80 trillion yen (US$725 billion) annually. The
announcement came after data showed that
the world s third-largest economy remains in
the doldrums, with household spending drop-
ping and unemployment ticking up.
Japan s move comes only two days after
the US Federal Reserve brought an end to its
own bond-buying programme. Investors have
been hopeful that the European Central Bank
might also start buying bonds to stimulate
that region s economy by keeping interest
rates low and injecting cash into the financial
system. That form of stimulus is called quan-
titative easing, also known among investors
"The Japanese central bank has taken the
QE baton from the Fed, and equity traders
couldn t be happier, " said David Madden,
market analyst at IG.
Japan s stock market rose 4.8 per cent to
the highest level since 2007.
The Japanese currency weakened dramat-
ically following the Bank of Japan s announce-
ment. The yen slumped 2.6 per cent against
the dollar to 112 yen. The yen is trading at
the lowest level in more than five years. Japan-
ese companies typically like a weak Japanese
yen because it makes their exported goods
European stock markets rose broadly fol-
lowing the Bank of Japan s announcement on
hopes that the ECB could be tempted to follow
Japan s lead in stepping up stimulus measures.
However, few think anything will be
announced at the ECB s next policy meeting
"The willingness of the Bank of Japan to
ease further in the fight against deflation will
encourage those who think the ECB should
be doing the same, " said Julian Jessop, chief
global economist at Capital Economics.
Britain s FTSE 100 rose 1.3 per cent. France s
CAC 40 jumped 2.2 per cent and Germany s
DAX climbed 2.3 per cent.
In other markets, the price of US benchmark
crude oil fell 58 cents to US$80.54 a barrel
in New York as increasing production from
OPEC members added to already high global
supplies of oil.
Brent crude, used to price oil in international
markets, dipped 38 cents to US$85.86 in Lon-
don. In other energy futures trading on the
NYMEX, wholesale gasoline fell 2.6 cents to
close at US$2.169 a gallon, heating oil fell
was flat at US$2.515 a gallon and natural gas
rose 4.6 cents to close at US$3.873 per 1,000
Bond prices fell. The yield on the US 10-
year Treasury note rose to 2.34 per cent from
2.31 percent Thursday.
In metals trading, the price of gold fell
US$27 to US$1,171.60 an ounce. Silver fell 31
cents to US$16.11 an ounce and copper fell
2 cents to US$3.05 a pound. AP
with a rally
Stocks rose across the globe Friday,
capping off a seesaw month for in-
vestors, after the Bank of Japan unex-
pectedly announced new stimulus to
boost the country's struggling econ-
The Dow rose 195.10 points, or 1.1 per
cent, to 17,390.52.
The S&P 500 rose 23.40 points, or 1.2
per cent, to 2,018.05.
The Nasdaq composite rose 64.60
points, or 1.4 per cent, to 4,630.74.
For the week:
The Dow rose 585.11 points, or 3.5 per
The S&P 500 index rose 53.47 points,
or 2.7 per cent.
The Nasdaq rose 147.03 points, or 3.3
For the year:
The Dow is up 813.86 points, or 4.9 per
The S&P 500 index is up 169.69 points,
or 9.2 per cent.
The Nasdaq is up 454.15 points, or 10.9
Traders David O'Day, left, and Peter Tuchman, centre, gather at the post that handlers Alibaba
on the floor of the New York Stock Exchange, at the close of trading, Friday, October 31, 2014.
US stocks ended October solidly higher, up 2.3 per cent. The Dow Jones industrial average
capped the rally by rising 195.10 points, or 1.1 per cent, to end at 17,390.52 on Friday. AP
Specialist Anthony Rinaldi, right, works at his post on the floor of the New York Stock
Exchange, on Friday, October 31, 2014.
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